Why I left Engineering/IT

I didn't leave because it was hard.
I left because it was no longer worth it.

Wednesday, May 31, 2017

My Investment Portfolio (May 2017)

STI closed the month at around 3210 points. Markets look like in a consolidation phase right now after doing well since the start of this year. Weak oil prices also affected the market. Having said that, there are still some good movements based on stock specific ideas.

For
this month, I have attended the following AGMs/EGMs/briefings - Medtecs, Camsing Healthcare and Low Keng Huat.

For
my top 30 holdings, stocks that did well include Haw Par, Best World and PNE Industries. Best World released a set of decent 1Q results while PNE Industries declared a special interim dividend together with their half-year result announcement. Laggards include Sarine Technologies, Far East Orchard, Stamford Land and ComfortDelgro. ComfortDelgro was especially beaten down after releasing a disappointing 1Q results.

With much of the dividends collected in May 2017 being re-invested back into the market, next month will be another quiet month for me. I will seek to re-invest the remaining dividends collected in May 2017 and also in June 2017 to reduce my portfolio cash drag.

My S'pore Stock Portfolio - Top Holdings, cash investment only (correct as at 31 May 2017)

17 Comments:

It seems you are adding position on finance companies. Do you anticipate the new MAS rule will boost their earning? or potential foreign partner?

What's your view on SingPost? Do you think the new logistic hub and SPC going to offset the declining mail revenue? It seems TradeGlobal is a very bad investment and their US e-commerce venture seems end up pretty bad.

Most of my positions in finance companies were added before the new MAS rule because I felt that were undervalued and overlooked by the market. Since the announcement by MAS, I only added onto Hong Leong Finance because I believe that being the largest finance company among the 3, it stands to benefit more from the new rule. Having said that, I still prefer finance companies over banks as valuation is generally cheaper.

For SingPost, I only added onto my position recently due to its price correction. I think valuation looks reasonable now after all the bad news had been out. With a new board and management, I am hopeful that they can turn it around and leverage on the infrastructure that the previous management had built up. Granted, some of those investment had not been up to mark, we have to trust the new group of people and see how they will deliver.

It is indeed disappointing that dividend was only 1cts from Stamford Land, but the result was not as good due to impairment of Dynon’s Plaza. Granted that Macquarie project was completed but they only recognized 174 out of 710 apartments in FY17. Therefore, most of the revenue will still be booked in FY18 and beyond.

I don't know why the dividend payout is still low but based on EPS of 4cts in FY17, he is paying out 25% of the profits. All of the operating cash flow in Q417 went to repaying bank borrowings. Might be a change of dividend policy or he has other investments in mind that he needs to conserve cash.

I guess we will only know the answer when most of the Macquarie project revenue had been recognized. That answer will come soon in FY18 and beyond.

Dear Sifu Chuawww.businesstimes.com.sg/companies-markets/mandarin-oriental-toys-with-the-idea-of-selling-the-excelsior-in-hk, I am happy for you n myself. But how much can we get it from this sale? Will it lead to JSH privatize MO? And how much shall we let go this counter?

The Excelsior is located in a prime location and therefore, I think it should fetch decent value. I do not know exactly how much it will be sold though. Have to wait for the details.

I don't think JSH will take MOIL private at this moment. As for MOIL, the reported RNAV is around US$3.10 per share. I think it is still good value at current levels, considering the fact that their hotels are located in major cities around the world and there are more under development. Also, they entered into management contracts with other parties and do not have to come out with equity, leveraging on their Mandarin Oriental brand. If you consider it trading below NAV with low debt level and its brand value altogether, I guess I am in no hurry to sell the stock at all.

Yes, YHS's 1Q result is disappointing, but my thesis when investing in YHS is not their F&B business but their land bank. If you happen to take a look at their annual report, you will notice that they have significant land bank and properties across Malaysia, Hong Kong, China and USA.

Besides divesting Super Group, they also recently divested some property in Hong Kong, netting $64m in sales proceeds. I don't know whether they will give a special dividend this year but based on the two mentioned divestments, it amounts to around $200m in cash proceeds which is quite significant. Unless they need big capex for their operations, I think they might distribute some back to shareholders.

Hopefully, they can continue to dispose idle assets and realized value for shareholders.

I guess for some of these property counters, the benchmark I use is normally NAV, and in some cases RNAV. I roughly have some numbers but these are just a guide. For example, in Wheelock case, the RNAV should be in the $2+ region, Wing Tai in the $4+ region, UIC in the $4+ region etc. But some other guides I use include whether the company has a higher allocation in development or investment properties. For companies like Wing Tai that has a higher portion of development properties, a larger discount to RNAV should be applied as the risk is higher.

How much discount will depend on each individual and their risk appetite. Everyone is different and you should have your own targets. Having said that, since there is a chance that some of these companies might be privatized, then you might wish to hold until when there is an offer and accept it if you think the offer is fair. In the meantime, you can collect dividends and being paid for waiting.

Thanks a lot for replying which benefits me a lot. I like undervalued property counters. At mean time, I am learning very slowly as i don't have finance background at all. Pls correct me if am wrong, like Wing Tai, when property market recovers, it shall more upside since it has more projects at hand, hence higher discount say 35% discount to its RNAV. While like HPL/UIC, the reverse is applied.

Yes, you can think of it this way, since the market had priced in the risk for pure developers and if the property market recovered in a big way, stocks like Wing Tai will benefit the most whereas stocks which hold a lot of investment properties will still go up but will underperform Wing Tai.

But when we are buying privatization plays, there is a risk that the stock might be taken private before the full effect of the recovery of the property market had been priced in. This is the risk that you will have to take into consideration.

I have not increased my position in Sarine Techonologies for many years. Reason being it is not my typical value stock which I am more comfortable with. It is more of a growth stock which I admit that I do not have the skill to deal with it.

The guidance given by the company is that this year will probably be better due to recovery in price. However, it is still a very specialized industry controlled by few players and I really cannot see where diamond prices will go. As you can see, diamond prices can affect demand for their products.

One thing I could bet on though is that the company is innovative. That could make it a good long term hold for me, and I do not foresee adding onto my position in the company in the near future.

About Me

A self-directed investor, looking to invest for retirement needs and bypass all those expensive financial planners/insurance agents. Investing is fun, profitable or most important of all, knowledge gained is useful for the rest of your life!